James Hardie considers compensation fund

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Building products company James Hardie Industries NV today signalled it was willing to contribute more funds to compensate asbestos victims, by suggesting it help fund the setting up of a statutory scheme to deal with future claims.

However the construction union has dismission the recommendation as being "more legal smoke and mirrors".

James Hardie made the suggestion in a submission to a NSW Special Commission of Inquiry, which is looking at whether the company sought to avoid its liabilities for asbestos-related illnesses.

In early 2001, James Hardie set up a foundation to deal with the liabilities of two former James Hardie subsidiaries, providing it with $293 million to meet future claims.

But actuarial reports have since estimated those claims could actually be more than $1 billion, with one estimate at $1.5 billion.

James Hardie has not yet said whether or not it would contribute more funds to The Medical Research and Compensation Foundation (MRCF).

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In its submission today, the company instead suggested helping fund "an effective statutory scheme" as a way of dealing with the blow-out in claims.

"The board of James Hardie announced today that it would recommend that shareholders approve the provision of additional funding to enable an effective statutory scheme to be established to compensate all future claimants for asbestos-related injuries caused by former James Hardie subsidiary companies," the company said in a statement.

James Hardie listed a number of legal principles on which the scheme would operate, including "speedy, fair and equitable compensation for all existing and future claimants".

However it did not detail how the scheme would work or how much it would cost.

"It is impossible to determine the funds required for the scheme because the parameters of the scheme have not yet been determined," James Hardie spokesman Chris Falvey said.

Whether such as scheme is set up or not will depend on the findings of Commissioner David Jackson, QC, due in September.

James Hardie will hand the submission to the inquiry later today, and further contents of the submission will remain confidential until noon (AEST) of July 28.

The Construction, Forestry, Mining and Energy Union (CFMEU) said a statutory scheme was missing the point.

"We regard this new initiative of James Hardie as being more legal smoke and mirrors," NSW state secretary Andrew Ferguson said.

"Any suggested James Hardie solution that doesn't involve fully funding their future liabilities is not acceptable to the CFMEU."

He said the union's members have been concerned about the issues raised at the commission.

"Our office has been inundated with calls from our members who have seen the publicity around this shenanigan by James Hardie and are very concerned that they might be affected, that if they came down with asbestosis that they might not be able to be compensated," Mr Ferguson said.

Shares in James Hardie were hardly affected by the statement today, lifting two cents to $5.95 by 1145 AEST, because investors have already priced in the possibility of the company having to dish out more funds.

Australian Shareholders Association spokesman Stephen Matthews said it was a possibility James Hardie shareholders would likely have considered when buying into the company.

"Nobody ever welcomes additional costs but this is not unexpected," he said.

"Shareholders expect the matter to be resolved and for the company to meet its product liability obligations."